Don't sell too soon after buying a property, agents warn
First-time sellers face the disheartening possibility of making a loss if they sell too soon after buying a property, says Arnold Maritz of Lew Geffen Sotheby's International Realty.
He advises sticking to the "five-year rule" to minimise risk.
The five-year rule states that you should stay in a location for five years or more before selling a property. "Under the current economic climate it could take a minimum of three years for your property to gain capital value that exceeds the transaction costs of buying and selling your first home alone," explains Maritz.
"These costs include transfer duty, conveyancing fees and bond registration costs when purchasing, and the agent's commission when selling."
The first step in preparing to sell your home is to get an accurate valuation. A high valuation might offer the promise of covering costs, but it also might result in a home that sits on the market at an unattainable price, losing value over time.
"Experts generally say an unsold house has a carrying cost of 1% of its value every month. That means that every month a house goes unsold, it costs the owner approximately 1% of the value of the home," says Maritz.
Valuations can vary drastically from agent to agent, so it's important to find one that you trust. A good rule of thumb to keep in mind is that if the price the agent values your house at seems unrealistically high compared to similar properties in that area, it probably is.
Selling too soon also means you have less time to make improvements on your property. The number one way to increase the value of a home is to renovate it and improve fixtures. For many homeowners this is more affordable and practical over time.
"A lot depends on the market at the time of selling, but a good real estate agent should be able to help increase your chances of making a profit when you're ready to sell your first home," Maritz concludes.
Lew Geffen Sotheby's International Realty Press Release
Posted at 06:23AM Feb 21, 2013 by Editor in Market |